The Asia-Pacific crude market rose on Monday, with October-loading Sokol kicking off at a record-high premium on a lack of arbitrage alternatives, traders said. More direction was also expected from an Indonesian tender to sell Duri crude.
India's Oil and Natural Gas Corp has sold Sokol crude for October 7 loading from Russia's Sakhalin-1 field at a record premium of around $8.50 a barrel to the Oman/Dubai average.
This is the highest premium fetched by ONGC in a tender since exports of the light sweet grade started in the last quarter of 2006. Russia's Rosneft also sold 700,000 barrels of Sokol crude for October loading, to European major Shell late last week, trading sources said on Monday.
One trader said the cargo traded at close to the level fetched by ONGC. "Regional light sweet crude and Murban are strong. So Sokol crude follows," a Singapore-based trader said. A wide Brent/Dubai Exchange of Futures for Swaps (EFS), which has stayed above $5 a barrel for the past month, has curtailed competition from West African crude that is priced off Brent and brought support to Dubai and Oman-related crudes.
Spot trading was otherwise limited as the market was in between loading months. A trader said Malaysia's Kikeh crude had traded, but details had yet to emerge and it was unclear whether this was the second cargo traded for the grade, after similar talk two weeks ago.
The grade has an API of around 34.9 and a sulphur content of 0.1 percent, making it slightly heavier and less sweet than Tapis. US independent Murphy Oil markets 80 percent of the new grade. Indonesia's oil and gas regulator BPMIGAS has issued a term tender to sell 400,000 barrels per month of the much sought after Duri crude for September to December loadings, traders said.
But the tender is tied to an offer of 500,000 barrels a month of Bontang Return Condensate (BRC), also for loading between September and December, making the package less attractive as BRC usually attracts limited interest, traders said. The forced closure of Japan's largest nuclear plant last month after an earthquake, already led to trades at a record-high premium of $5.60 a barrel to the Duri Indonesia Crude Price (ICP), on expectations of a surge in demand.
The front-month September Tapis/Brent Exchange of Futures for Swaps (EFS) was assessed about 30 cents lower to $3.90-4.20 a barrel on Monday. ICE Brent fell 96 cents to $73.79 a barrel at 0917 GMT and down about $1.55 from the close of Asian trading on Friday as concern about the United States economy rippled through financial and commodity markets.
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